Virgin One Account Mortgage advice please?

jenks282_2

Hi all,

I'm new to this forum business so i apologise in advance if I'm reposting or posting in the wrong place. I would like to get some opinion on the Virgin One account and whether it is suitable for me as my financial knowledge is limited and I feel there are many people on here who can give good advice.

My situation:

I am currently serving in the army earning £32500 per year with a £126000 mortgage on a £140000 house. My current interest only mortgage ends it fixed rate in a few months which I pay £650 a month.

My wife has just finished her teaching degree and starts work in September earning around £20000. We can afford to live on my wages and a little of hers so will have a few hundred pounds left over each month. I will also leave the army in 6 years with approx. £30000 golden handshake which I will pay towards the mortgage.

The mortgage shrinker calculator on the Virgin website suggests I will be able to pay off the mortgage in 8 years if I leave £600 in each month. Is this wise?

Thanks in advance for ANY advice you could give me as I don't want to get stuck in something that I will regret. I am currently in Afghanistan so please excuse any delays in replying to messages. I will get online when I can.

Thanks again,

Gavin

mclaren32

You could achieve the same benefits with an offset mortgage which can be easier to manage than a "one account" which at face value could be difficult to handle - im not sure I could cope with a £126,000 overdraft.....

jenks282_2

Thanks for the reply.

I thought it was an offset mortgage....:think:

Gorgeous_George

It is.

The key to all this is the INTEREST RATE. If you can save/invest and earn more after fees and tax than the interest rate on your oneaccount do it. If not, load up the oneaccount with every spare penny .

A more mainstream offset mortgage account could offer a better interest rate (i.e, a LOWER rate).

Stay safe buddy.

GG

babyharry5

jenks282 wrote: »

Thanks for the reply.

I thought it was an offset mortgage....:think:

Hi
it is an offset mortgage - however, you can also draw back down on the mortgage at any time ( up to your set credit limit)
i.e. take money back out

I had a virgin one account, and though it may work for some people, it didn't for us.
The temptation to spend again is very high - you receive your statement each month advising what you have available to spend.

We changed to another offset mortgage, whereby you couldn't access the excess funds quite so easily.

getmore4less

have read of this thread

https://forums.moneysavingexpert.com/discussion/471

The one account has a lot of people with complaints and is not the cheapest offset.

The calculator can double count if you are not carefull so looks better than it should be.

The main issue you have at the moment is the 90%LTV

the max lending on the one account is 75% LTV(the calculator still lets you do 99%)
https://service.oneaccount.com/DAPP/currentrates.do

What is the follow on rate at the end of the fix?
Might be best to stay on that and just overpay.


Based on 4% £126k with £650 + £600 it takes 10y 4m to pay off

With a £30k input at y6 it takes another 2 so 8years in total.

jenks282_2

Thanks all, I will definitely look into an offset mortgage as this seems to be the better option going on your advice. I didn't realise it was so easy to overpay.

The 75% LTV puts it out of my budget anyway.

Cheers,

Gavin

opinions4u

If you can find a low rate mortgage that allows you to overpay by £600 a month, then this may be better value than an offset mortgage.

A mix of fixing and overpaying can give you protection from rate rises and still give you the chance to rapidly reduce the debt, while retaining a degree of flexibility over your finances.

Alternatively, just go for the cheapest mortgage with a very short term that you can afford.

getmore4less

opinions4u wrote: »

If you can find a low rate mortgage that allows you to overpay by £600 a month, then this may be better value than an offset mortgage.

A mix of fixing and overpaying can give you protection from rate rises and still give you the chance to rapidly reduce the debt, while retaining a degree of flexibility over your finances.

Alternatively, just go for the cheapest mortgage with a very short term that you can afford.

The advantage of an offset is that the OP comes out of the forces in 6 years and may not get work imediately, there would be plenty of buffer funds with the overpayments and the £30k. needs to be part of a long term plan.

jenks282_2

getmore4less wrote: »

The advantage of an offset is that the OP comes out of the forces in 6 years and may not get work imediately, there would be plenty of buffer funds with the overpayments and the £30k. needs to be part of a long term plan.

Thanks for the vote of confidence ! :eek:

I know what you mean, and it is a valid point, in these troubled employment times. I can stay on in the Army beyond my 22 year point if I need to (but really prefer not to) but would ideally pay off the mortgage by the time I leave, or have a minimal amount left that would be covered by my pension. Hence the overpayments using my wife's new wages that we have got by without until now.

I don't know what is best tbh, but when I get home I will be banging on the door of many financial advisers.

swaggy123

Hi,
I have had a one account for 4 years and it has worked for me.

Babyharry5 (above) is correct to state that you have to be disciplined in you approach to spending money as the full amount you have borrowed is always available; but this has the advantage that you do not have to put money away for a rainy day (emergency fund are available if you can trust your self only to use them in an emergency) .

Getmore4less states that there have been a lot of complaints. I have had a few minor issues with them. Mostly over a change of address (I dont live at the morgage address) but the one account is in the top 3 of Which Money customer statisfaction survey. One account is owned by RBS (not virgin).

Getmore4less also states that it is not the cheapest, true, and you will need to balance the (slightly) higher interest rate against the flexibility and the fact it will be charged against less money. The best rate is if you only borrow 50% of the value of your home. (you pay for the new valuation as well).

As a member of the AF you will always be paid on the last working day of the month (often a Friday). Even if all your DD and Standing orders come out on the 1st of every month One account use the Friday figure to calculate interest payments Sat and Sun (and Monday if it is a bank holiday) which will always work in your favour.

The advantage for an offset morgage is greatest for a higher rate tax payer - no tax on your savings because you dont actally earn any interest you just pay less in interest. (but always consider your ISA allowance)

I hope this helps.:)